Plaintiff, a shareholder of Dreyfus Liquid Assets, Inc. (the "Fund"),
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commenced this shareholder derivative action against the Fund,
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its directors, and the Fund's investment adviser, Dreyfus Corporation (the "Adviser"), alleging that management fees paid by the Fund to the Adviser since November 16, 1980,
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were, are and will be excessive and unreasonable and that receipt of such excessive compensation constitutes a breach of defendants' fiduciary duty to the Fund in violation of section 36(b) of the Investment Company Act of 1940, 15 U.S.C. § 80a-35(b) (1976) (the "Act"). Complaint para.'s 12, 15.

Defendants have moved for summary judgment pursuant to Fed. R. Civ. P. 12(b)(6) and 56(b) contending that the instant action is barred by principles of res judicata in that it constitutes a collateral attack upon a judgment approving a settlement of four earlier derivative actions.
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The four prior actions sought both damages for excessive fees paid to the Adviser between 1975 and 1977 and injunctive relief to prevent any future breaches of fiduciary duty. The actions were settled pursuant to an agreement between the parties which provided, inter alia, for a method of fixing the Adviser's future fees in accordance with a sliding scale fee schedule based on the level of the Fund's average daily net assets
*fn5"
("Settlement Agreement"). Exhibit M to Stipulated Statement of Facts.

The Settlement Agreement, which by its terms required shareholder approval as a condition to its effectuation, Exhibit F to Stipulated Statement of Facts, was to remain in force until 1986, Id. and was approved by the Court on July 13, 1981, Krasner v. Dreyfus Corp., 90 F.R.D. 665 (S.D.N.Y. 1981) (Cannella, J.). Thereafter, the shareholders received notice of the settlement
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and the Court's approval thereof. After an opportunity to lodge objections to the Court's approval of the settlement,
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the shareholders overwhelmingly approved the Settlement Agreement on October 14, 1981.

While plaintiff does not dispute the fact that the Settlement Agreement fixes the Adviser's fees through 1986, he contends that the receipt of such fees constitutes a breach of fiduciary duty because the Fund's assets have increased substantially in recent years
*fn8"
without a parallel increase in the Adviser's costs in rendering the service. Complaint paras. 12, 14. Plaintiff argues that, since the prior actions did not allege that excessive advisory fees were paid in 1980 and thereafter, the claims now raised are not barred by principles of res judicata. Plaintiff further contends that, even though the Court considered the impact of future increases in the level of the Fund's assets in approving the sliding scale fee schedule through 1986, he is not thereby precluded from bringing suit since a claim for breach of fiduciary duty may not be barred from de novo review on the basis of a prior settlement. This contention lacks merit.

In Lerner v. Reserve Management Co., [1981 Transfer Binder] Fed. Sec. L. Rep. (CCH) P 98,036 (S.D.N.Y. 1981), this Court considered a similar motion for summary judgment. In that case, three shareholder derivative actions, which alleged that investment advisors had been receiving excessive compensation by reason of "mushrooming growth" in fund assets, were settled. The settlement was approved by the Court and subsequently embodied in a judgment. Id. at 91,367. The settlement agreement, which incorporated a sliding fee scale quite similar to that in the instant case, was to be in effect for five years. Id. During the effective period of the settlement, the Lerner action was commenced. Id. The Lerner plaintiffs, like plaintiff in the instant action, alleged that the management fees, which were being paid in accordance with the settlement agreement, were excessive. Id. Judge Griesa observed that "a continuation of the economic pattern" existing at the time of the earlier actions had raised fund assets and fees to levels higher than at the time those actions were settled.
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Id. at 91,368. Nevertheless, he found that, "this [was] not a sufficient reason to allow the settlement . . . to be overturned by a new action." Id. Pointing out that the parties to the earlier actions had bargained for the five-year agreement, and that the court had approved it, id., Judge Griesa held that the subsequent action sought "to impair or destroy rights and interests established by the judgment" entered in the earlier actions. Id. Accordingly, he dismissed the subsequent action.

While plaintiff admits that the Lerner decision is on point he urges the Court to reject it as wrongly decided since it applied a contract analysis in concluding that the settlement of the prior cases barred the action in issue. Plaintiff's Memorandum at 28. This Court finds Judge Griesa's reasoning persuasive. The parties bargained at arms-length for the Settlement Agreement, which was carefully reviewed by Judge Cannella who specifically considered the possibility that the Fund's assets would increase in the future. Krasner v. Dreyfus Corp., 500 F. Supp. 36 (S.D.N.Y. 1980) (Cannella, J.); see Fed. R. Civ. P. 23.1.
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Indeed, it was for this very reason that he called for a further evidentiary showing of the fairness and reasonableness of future compensation levels. Id. at 44. After reviewing all the evidence, Judge Cannella concluded that the Settlement Agreement was fair, reasonable and adequate. 90 F.R.D. at 673.

The cases relied upon by plaintiff are inapposite. None holds that a claim for breach of fiduciary duty may not be barred from de novo review on the basis of a prior settlement agreement.
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The Court therefore concludes that plaintiff's claims for breach of fiduciary duty are barred and must be dismissed.

Defendants' motion for summary judgment is granted.

SO ORDERED.

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